Changes to ease Turkey bottleneck

THE latest modifications to Turkey’s new mining law may finally unblock the country’s notorious mine permitting logjam, writes Ruth Green.

Staff Reporter

The changes include measures aimed at encouraging tenement-licence turnover to reduce the number of areas currently sterilised to exploration due to under-utilisation and introduce a new royalty framework which scales according to commodity price.

It will also see relinquished or abandoned licence areas put up for auction and efforts will be made to define licence areas according to geological continuity of their mineralised features.

The modifications to the law, which was originally passed by the Turkish Parliament on February 4, were approved by president Recep Tayyip Erdogan on February 17.

Turkey-focused gold exploration and development company Ariana Resources believes the changes could have a transformative effect on the country’s mining industry.

“The changes to the law are viewed by many as representing the further evolution of the Turkish mining sector and will encourage further professional development of the industry,” Ariana managing director Kerim Sener said.

“Increased ground turnover will be an outcome of the new law, as only currently producing or relatively near-term development projects will be retained due to enhanced costs associated with their maintenance.

“In the past, large areas of the country were effectively sterilised to exploration because licences owners could hold ground at minimal cost and by undertaking limited work. The new law will fundamentally change for the better the way in which both exploration and mining is undertaken in the country in the medium-to-long-term.”

Sener also said the modifications would help spur on the country’s mine permitting process: “We are now confident that these changes will also catalyse the permitting process for the mining sector in general,” he said.

He warned more expensive licences could result from competitive bidding processes.

“The cost of acquiring new licences in Turkey will be significantly higher than in the past, as licence acquisitions will be via competitive auction or licence transfer only,” Sener said.

“This is one aspect of the new law that could have a limiting effect on any greenfields-type exploration.”

Previously a change in the way forestry permits are processed has lengthened the company’s bid to access areas to start construction at its flagship Red Rabbit project.

The company says its application to the Department of Forestry is still being processed.

This is not the first legal change that has hit the country’s mining industry in recent months.

In September, a wide-ranging Omnibus Bill was passed in reaction to the Soma coal mine disaster in a bid to improve social security and health and safety provisions for underground coal miners.

However, the move attracted criticism from some smaller companies which have seen their production costs soar as a result of the amendments and been forced to shutter their operations.

Ariana’s shares were down 2.7% to 0.890 pence per share immediately after it issued its statement on the modifications.

But given the company’s shares rose 8% at the end of February 2014 after reports emerged suggesting the country’s mine permitting bottleneck was on the verge of being unblocked, the company is likely hoping that a little more good news may work in its favour.

Originally published on affiliated publication